A new circular of the Ministry of Justice that guides the auctioning of mortgages has faciliated the VAMC to deal with bad loans. — Photo hanoimoi.com.vn

HA NOI (Biz Hub) ─ The Viet Nam Asset Management Company (VAMC) has gained a profit of VND380 billion, or US$18.10 million, from bad debt processing.

VAMC Chairman Nguyen Quoc Hung made the announcement at a press conference held by the State Bank of Viet Nam (SBV) in Ha Noi on October 28.

This year, the company purchased more than VND55 trillion ($2.62 billion) of bad debts, or about 80 per cent of the VND70-trillion ($3.33 billion) target that it had set for 2014. VAMC sold VND3.5 trillion ($164.32 million) of debts, exceeding the annual target of VND2.5 trillion ($117.37 million).

Hung said that many businesses have managed to restructure and recover debts, while the Ministry of Justice has issued Circular 18/2014/TT-BTP that guides the auctioning of mortgages, facilitating VAMC to deal with bad loans.

"We will try to reduce the bad debt ratio to three per cent and buy debts following the market prices in 2015," he added.

SBV Deputy Governor Nguyen Thi Hong told the press conference that bad debts in the domestic banking system are tending to decline.

Bad debts amounted to 4.17 per cent in late June, 4.11 per cent in late July and 3.9 per cent in late August, besides 3.88 per cent in late September.

Hong said that while VAMC is preparing to submit a plan on debt trading as per the market prices to the government for consideration, SBV has instructed commercial banks to enhance risk provisions and intensify supervision of new loans to prevent bad debts from increasing.

Within a year, as of October 27, 2014, VAMC purchased nearly VND95 trillion ($4.52 billion) in bad debts, for a total of VND78 trillion ($3.71 billion), according to Hung. ─ VNS